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PERSONAL TAX AND ALLOWANCES
Basics
Generally the personal allowance is £10,600 with entitlement to a maximum of £10,660 for those born before 6 April 1938.
Conditions and restrictions apply to the entitlement over £10,600. Non-savings and savings income above the personal
allowance is taxed at rates from 20% to 45%.
Some taxpayers with very modest savings and income may only pay 10%. The basic rate of tax increases to the higher rate for
taxable income over £31,785 and to 45% when taxable income exceeds £150,000.
A higher marginal tax rate may be payable between £100,000 and £121,200 when the personal allowance is gradually
withdrawn giving an effective marginal rate of 60% in this band for non-savings and savings income.
In some cases, you can transfer £1,060 of your personal allowance to your spouse or civil partner.
Planning
• Is everyone in your family taking full advantage of their personal allowance?
• Are there opportunities to utilise any unused allowances this tax year?
• What can you do to take advantage of marginal tax rates and reduce the slice taxable at a higher rate?
Basics
Ordinarily, each person is entitled to make a tax-free gain up to £11,100 (or up to £5,550 for trusts). Thereafter, gains are
taxed at a rate that is income dependent. Where taxable income is less than £31,786 the capital gains tax rate for gains up to
the spare basic rate band allowance is 18%. Thereafter, this rises to 28%. The rate applicable to a trust is 28%.
For business owners entrepreneurs’ relief gives rise to a lower rate of 10% for qualifying gains which provides for a maximum
reduction in tax of £1,800,000 (if the gain were £10 million, the current upper limit).
Planning
• What tax can be saved by maximising the advantage of family member tax-free exemptions?
• Should an asset that is going to be sold in the future be transferred into joint names?
• If a gain is going to be realised are there other assets which are standing at a capital loss that can be used to reduce the
quantum of your gains?
• If tax is due, are there ways of deferring or rolling over the gain?
Allowances and rates affecting income, savings, investments and pensions
PERSONAL ALLOWANCES
CAPITAL GAINS TAX
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